CHAPTER –
3
ECONOMIC
REFORMS IN INDIA SINCE 1991
PART - 6
GLOBALISATION
GLOBLISATION - Globalization
may be defined as a process associated with increasing openness, growing
economic interdependence and deepening economic integration in world economy.
In short, integrating the economy of the country with the world economy.
THE CHANNELS
1. Trade of goods and services
2. Movement of capital and flow of finance
3. Use of information technology to reorganize production and other
activities in to networks that span the world.
FACTORS FOSTERING GLOBALISATION IN INDIA
1. Technical changes,
2. Competition,
3. Liberalisation policies,
4. Emergence of United states as a super power,
5. Experiences of Developing countries,
POLICY MEASURES ADOPTED UNDER GLOBLIZATION
1. Rise in equity limit participation of foreign investment: Investment limit for foreigners
increased from 51% to 100 percent in 47 High Priority Industries, which
requires high investment and high technology.,
2. Devaluation of Rupee: The value of rupees in terms of
foreign currency, devaluated by 18-19 percent. This devaluation increased
India’s exports and Foreign Exchange Reserves.
3. Convertibility of Indian rupee: To integrate Indian economy with the
world economy, the Union Budget 1992-93 made Indian rupee partially convertible
and in 1993-94 budget, the rupee was made fully convertible.
4. Long Term International Trade Policy: The first Export and Import Policy
(EXIM policy) was made in 1992 for the period of five year i.e. 1992-97. In
this policy, removed all restrictions and controls on international trade and
allowed market forces to play an important role in International market.
5. Reduction in tariff: Custom duty reduced from 250% to 10% by 2007-08.
6. Withdrawal of Quantitative Restrictions: All type of quantitative
restrictions has been withdrawn gradually. Since 2001, there are no
quantitative restrictions on international trade.
7. Allowing Indian companies to enter in to foreign collaboration in
India and also encouraging them to setup joint ventures in abroad.
8. Removing constraints and obstacles to the entry of MNCs.
9. Modification in technology agreements.
EFFECTS OF GLOBALISATION
FAVOURABLE EFFECTS
1. It enables wider access to the global market.
2. It enables spread of new and advanced technology across the world.
3. It enables skilled person across the globe to utilize his skills and
earn better income.
4. It provides a range of services across countries in a cost effective
manner, which helps to reduce.
5. Better future prospects for large Indian industries.
6. Increasing share of exports in world trade,
7. Favourable effect on Export-Import Ratio,
8. Application of high technology,
9. Stable and strong exchange rate.
ADVERSE EFFECTS
1. More benefits accrue to the developed nations, as they are able to
expands there markets in other countries.
2. Its increases economic inequality among nation as well as within
country.
3. It compromises with welfare of people of developing and poor
countries.
4. It enables MNCs to gain a strong foot held in market of developing
nations.
5. Because of the poor competitiveness strength of developing countries,
globalization has worked to them disadvantage.
6. Decrease in Revenue of Indian Industries,
7. Increasing share in capital and management by foreign entrepreneurs,
8. Export of Profit.
AN APPRISAL OF LPG POLICIES
Merits of LPG Policies – Following observations highlights the
merit of LPG policies –
(i) Vibrant Economy,
(ii) Stimulate to Industrial Production,
(iii) A Check on Fiscal deficit,
(iv) A Check on Inflation,
(v) Consumer’s Sovereignty,
(vi) A Sustainable Increase in ForEx Reserve,
(vii) Flow of Private Foreign Investment,
(viii) Recognition of India as an Emerging Economic Power,
(ix) A Shift from Monopoly Market
to Competitive Market.
Demerits of LPG Policies – Following observations highlights the
demerit of LPG policies –
(i) Neglect of Agriculture,
(ii) Urban Concentration of Growth Process,
(iii) Economic Colonialism,
(iv) Spread of Consumerism,
(v) Lopsided Growth Process,
(vi) Cultural Erosion.
OUTSOURCING
It refers to contracting out some of its activities to a third party,
which were earlier performed by the organization. In other words, Outsourcing
means obtaining goods and services by contract from an outside source.
* Outsourcing is one of the important outcomes of globalization.
* It has intensified in recent times, particularly the growth of IT
sector.
* The New Computer Policy (NCP) was made in 1984.
* First Software Technology Park was established in Bengaluru.
* In 1999-2000, Import tariffs were reduced to near zero level, foreign
participation was also allowed and telecommunication facilities were expanded
considerably.
* Information Technology Act was passed in 2000.
India has become a favorable destination of outsourcing. The reason
behind the same are:
1. Low wage rate
2. Skilled Manpower
The main services outsourced from India are:
1. Voice Based like BPOs and Call Centers.
2. Record Keeping
3. Accountance
4. Banking
5. Music Recording
6. Film Editing
7. Book Transcription.
8. Clinical Advice
9. Tuition etc.
REFERENCE VIDEO
New
Economic Policy / Economic Reforms 1991 – Part 6
(Globalization)
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